"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 10 November: China to report October M0, M1, and M2 money supply growth rates
• 10 November: China to report October total social financing
• 10 November: China to report October new renminbi loans
• 14 November: China to hold press conference on national economic performance
• 14 November: China to report October industrial production data
• 14 November: China to report October energy production level
• 14 November: China to report October investment in fixed assets (excluding rural households)
• 14 November: China to report October real estate investments
• 14 November: China to report October total retail sales (TRS) of consumer goods
• 14 November: China to report October home prices

Next week brings a heavy slate of data releases for mainland China, with retail sales in focus.

For retail sales, we expect year-on-year growth of 3.5 per cent, a 0.5 percentage point improvement from September. The Mid-Autumn Festival should support October consumption for a modest rebound. According to the Ministry of Culture and Tourism, the eight-day National Day and Mid-Autumn holiday saw 888 million domestic trips, up 16.1 per cent compared to last year’s seven-day break, while tourism spending rose 15.4 per cent to reach RMB 809 billion (USD 113.6 billion). However, average daily per capita spending fell by 13 per cent, underscoring persistent caution among households.

For e-commerce, unlike in past years when the major “Double Eleven” online shopping festival began early, 2025 has limited scope for an early start. Parcel volumes in the first four weeks of October recorded year-on-year growth of 5.7 per cent for collection and 5.4 per cent for delivery, signaling steady momentum in logistics activity.

Beyond short-term drivers, structural factors will shape China’s long-term demand trajectory. While the “Five-Year Plan” focuses on developing the AI industry chain, a less visible but critical theme is welfare reform. Household savings remain elevated at roughly 35 per cent, nearly double the average in mature economies. High precautionary savings reflect lingering shocks since 2018, such as pandemic disruptions and property downturns, but the underlying issue is insufficient social safety nets. In 2023, China’s public social security spending stood at 11.7 per cent of GDP, well below the 20 per cent OECD average. Amid a fragmented social security system, we believe welfare reform could be a pivotal lever for rebalancing, unlocking savings to support consumption and deepen capital markets. Estimates suggest that providing migrant workers and farmers equal access to pensions and healthcare could lower China’s household saving rate by 3-5 percentage points, which would encourage greater investment and consumption activities. Welfare reform under the new “15th Five-Year Plan” could release savings, lift consumption, strengthen corporate earnings, boost asset prices, and support wage growth – a virtuous cycle investors are watching closely.

China equities maintained their week-on-week ascent. As of Thursday, 6 November, the MSCI China Index rose by 1.52 per cent, the Shanghai Composite gained 1.34 per cent, the Shenzhen Component advanced by 0.55 per cent, and the ChiNext Index climbed 1.16 per cent from the previous week’s close. Large-cap stocks slightly outperformed small- and mid-cap peers, while value stocks held a marginal edge over growth counterparts.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.

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